Document reveals Sea to Sky Highway being 'shadow' tolled

Paying for per vehicle usage of highway not a toll: MOT

The Ministry of Transportation is denying that the Sea to Sky Highway has a "shadow" toll despite the highway operator stating that such a toll is a financing method in presentations to industry peers.

The Sea to Sky improvement project was believed to be toll-free until Vancouver-based political blogger Laila Yuile posted several documents - including a presentation by David Hein, principal engineer and vice-president of transportation for Applied Research Associates Inc. (ARA) - to her website on Oct. 25.

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ARA is an international research and engineering company affiliated with the S2S Transportation Group (S2S), contracted to operate the road.

A shadow toll is paid to the road operator by the government instead of by the road user, and is based on traffic counts and an agreed rate per vehicle type.

Hein clearly lists a "shadow toll" as one of several factors meant to serve as "protection against loss of revenue" in his presentation on behalf of S2S at a 2009 pavement conference held by the Transportation Engineering and Road Research Alliance (TERRA) at the University of Minnesota on Feb. 12, 2009.

More precisely, "the shadow toll means no driver disincentive to use road." And in the long run, it ensures tax dollars are used for ongoing highway maintenance projects.

Hein said this accurately reflects the current situation on the Sea to Sky Highway.

"In essence, it's based upon availability payments," said Hein. "The concessionaire is paid to operate and maintain the highway. As long as the highway is available to the public, the government is paying to maintain the highway."

S2S is the consortium of world leaders in highway financing, construction and operation - including Peter Kiewit Sons - selected by the Campbell government in June 2005 to design, build, finance and operate the $600 million Sea to Sky highway improvement project for a 25-year concession period.

Yuile posted a confidential Sea to Sky case study issued by Macquarie North America, the project lead responsible for arranging the financing for S2S, called "PPP's in North America - A private sector partner's perspective," which singles out the shadow toll as one of six principle "transaction" features of the project.

Hein concedes the province may be using another term in its publicly available contract with the concessionaire.

"It's probably not called a shadow toll," said Hein from his Toronto office on Monday (Nov. 1). More likely, he said, it's called "an availability payment."

A 2006 project report available on the Partnership BC website called "Achieving Value for Money" states the "S2S is prohibited from charging tolls." The same report also shows "availability payments" as a method of financing.

And after Yuile's post went viral, public affairs bureau representative for the Ministry of Transportation, Dave Crebo was quick to issue a statement denying her findings, which Yuile promptly posted.

"There are no shadow tolls on the Sea-to-Sky Highway," states Crebo in his response.

"As part of the operations and maintenance portion of the contract with the concessionaire, performance measures are in place for such things as lane availability, efficient movement of traffic and safety as measured by accident statistics. Additionally, these performance measures are monitored and audited by ministry staff on an ongoing basis. That means if the concessionaire does not meet these standards, then penalties are applied and they don't earn their full payment."

Jeff Knight, media spokesperson for the MOT, asserts the same denials, telling The Chief "there are no shadow tolls" when asked to comment on two reports published by the S2S Transportation Group partners in 2006 and 2009. Any reference to shadow tolls is "old information," said Knight.

"The auditor general reviewed and approved our contract," he said. "That contract is on the Partnership BC website."

However Yuile stands by her findings.

"I have been working on a number of stories involving the Ministry of Transportation, Partnerships BC and several large Ps projects since the failed Port Mann P3," said Yuile.

"At the time, I blogged about how odd it was that they kept the companies on that were part of the group whose financing fell apart. Frankly, it smelled rotten to me, and that one story resulted in a flurry of contacts from industry insiders who had long awaited for someone to come along and look at how the MOT [Ministry of Transportation] does business."

And Hein's explanation of the payment system appears to contradict the MOT's denials.

Hein told The Chief that the Sea to Sky toll is similar to one that took effect on a highway project in New Brunswick where, in 1999, the opposition party was committed to removing the tolls on the highway from Moncton to Fredericton.

This commitment led to the opposition's election to government and the tolls' removal. However, Hein said, a shadow toll took their place leading to New Brunswick residents paying for the highway rather than individual users.

When asked if B.C. residents are paying for a shadow toll on the Sea to Sky, Hein responded: "In essence, that's how most of these work."

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